The USD/CAD pair fell fairly hard as oil markets rallied on Monday, pushing demand for the Loonie higher. If should be noted that this is with the trend, and as such – we expected this move. We had told you that the oil markets would hold the key for this pair, and this has proven true. The 0.98 level will be somewhat supportive as all round numbers tend to be, but in reality – this pair going down is natural as it is with the overall trend.
If oil can break above the $90 mark, you can pretty much bet that this pair falls hard in reaction. The 0.9450 level would be inviting as traders know that the situation in this pair is decidedly down. If economic numbers out of the US are good this week, (CPI on Thursday as well as Philly Fed numbers) this could accelerate the down move as traders will certainly buy oil, and then buy the CAD in turn.